ASSETS: Green bond funds ended the month as they had begun, with a combined total of $1,324.7 billion in net assets. This was the lowest month-over-month change in net assets March 2020. In June, the Calvert Green Bond Fund gave up a net of $11.7 million while VanEck Vectors Green Bond ETF and iShares Global Green Bond ETF gained a net of $7.3 million and $1.2 million respectively (see Chart 1).
While green bond funds were flat for this period, individual green bond issuance volume gained traction, posting $40.82 billion in new bonds and closing the first six months of the year at 75% of last year’s entire green bond issuance. In part, higher volumes during this period were due to stepped up issuances in China. According to China Daily, in the first five months of this year, 150 green bonds worth 192.5 billion yuan ($29.8 billion) were issued in China’s bond market, up by 56.25% and 82.72% year-over-year (see Chart 2).
PERFORMANCE: With its 50 bps average increase in June, the green bond fund universe that we created, comprised of 22 funds and share classes, came in behind the performance of the investment-grade intermediate Bloomberg Barclays US Aggregate Bond Index and the ICE BofAML Green Bond Index Hedged US by 11 and 20 bps, respectively. That said, the average results achieved by the green bond funds over the trailing twelve months eclipsed both conventional benchmarks while the three-year average performance results, applicable to just three funds, including the oldest and largest Calvert Green Bond Fund, were mixed (see Table 1).